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Ming Jie Ang asked 3 years ago

Good day, 
Thanks for organizing the workshop session. I went back and did some homework on and I chanced upon HMI.

  • I was attracted to the company based on its growing financial, low debt and the negative CCC.
  • Things that I have taken noted of
    • Increase in outstanding shares
    • Unsure if the management interest is aligned to shareholder 
    • Increase in number of beds while their occupancy rate is only ard 60+% region
    • Increase in competition and the forex risk 
  • Given that they have acquired all 100% of the hospitals, revenues are expected to raise and the promise to pay dividends of at least 20% of its earnings. What are the other pit holes that I should take note of when I am studying this company.
  • What is a fair P/E ratio and Price to cash flow ratio when valuating such medical company
3 Answers
Victor Chng answered 3 years ago

Hi Ming Jie,
 
You may want to find out the company patient mix between foreigner and local. If they rely too much on medical tourism, than when the competition heat up regionally may affect them.
 
To get a fair PE & PCFO, you have to find out what the trading range for HMI personally as compared to their competitors like raffles medical, IHH and etc. Do note that medical company tend to trade at higher PE multiple mostly above 20 times. 

Jeff answered 3 years ago

Just to share quick comparison of multiple medical services operation listed in SGX.
https://drive.google.com/open?id=1tayANzpE73omLu24t0rdWeSBtQC7Pwyc
I haven’t research any of  business yet but from figures itself seems like HMI current valuation on high side like others as per Victor comment.
Also it’s interesting to see that IHH ratio seem way too far from average …

Victor Chng answered 3 years ago

Thanks for sharing Jeff. :)